Part 7: disability discrimination and rating valuation
The Valuation Office Agency's (VOA) technical manual for the rating of business (non-domestic) property.
The principle provisions of the Disability Discrimination Act 1995 came into force on December 2 1996. This Act has now been repealed and replaced with the Equality Act 2010.
The Equality Act 2010 brings together the requirements on disability and other potential discrimination. Following the passing of the Disability Discrimination Act 1995, duties on service providers towards disabled people had been developed through three stages:
- from December 1996 it became unlawful for service providers to treat disabled people less favourably for a reason related to their disability;
- from October 1999 service providers had to make ‘reasonable adjustments’ for disabled people, such as providing extra help or making changes to the way they provide their services;2 and
- from October 2004, service providers had to take ‘reasonable steps’ to remove, alter or provide a reasonable means of avoiding a physical feature which made it impossible or reasonably difficult for disabled people to use a service.
In considering rating valuations one of the factors which may affect rental value is the suitability of premises for persons who are disabled. Where premises have features which do not make them suitable, then it is possible value may be affected.
At the time of the introduction of the Disability Discrimination Act 1995 it was thought the effects of the act might impact upon the property market. It required service providers to make reasonable adjustments to their premises so as to make them accessible to disabled people. What is “reasonable” was not defined but affordability appeared to be a major consideration. It was recognised that physical barriers might have to be removed/adapted if the service could be provided in a satisfactory and non discriminatory way by another acceptable means.
The effect if any needs to be considered together with other factors such as the energy rating of premises and, indeed, their general suitability for their use.
This section covers firstly the requirements of the Equality Act in relation to the requirements for disabled persons and then its practical application in the context of non domestic rating.
NB The Equality Act 2010 is a complex piece of interwoven legislation with additional regulations made under its authority. There are substantial guides available covering its application. This section of the Rating Manual only gives very limited guidance in relation to the specific question of the impact of the Act and its predecessors upon rating valuation.
2. The Equality Act 2010
The Disability Discrimination Act 1995 sought to provide disabled people with an equal opportunity in terms of employment, access to goods and services and dealings with property.
The Equality Act 2010 has a wider remit in bringing together legislation on all types of discrimination. The Act prohibits discrimination against people because of various ‘protected characteristics’ specified in section 4 of the Act. These include disability.
The following characteristics are protected characteristics—
- gender (i.e. sex) reassignment;
- marriage and civil partnership;
- pregnancy and maternity;
- religion or belief;
- sexual orientation.**
Protection from discrimination applies to disabled people in various circumstances, covering the provision of goods, facilities and services, the exercise of public functions, premises, work, education, and associations. Only people who are defined as disabled in accordance with the Act are covered though there is protection for non-disabled people who are incorrectly thought to be disabled or are subjected to direct discrimination or harassment because of their association with a disabled person.
Guidance has been issued by the Office for Disability Rights Issues which gives guidance on matters to be taken into account in determining questions relating to the definition of disability. This does not impose legal obligations nor is it an authoritative statement of the law, but must be taken into account by an adjudicating body such as a court or tribunal
3. Definition of disability
The Act defines a ‘disabled person’ as a person with a disability. A person has a disability for the purposes of the Act if he or she has a physical or mental impairment and the impairment has a substantial and long-term adverse effect on his or her ability to carry out normal day-to-day activities (S6(1)).
This means that, in general:
- the person must have an impairment that is either physical or mental;
- the impairment must have adverse effects which are substantial
- the substantial adverse effects must be long-term; and
- the long-term substantial adverse effects must be effects on normal day-to-day activities.
The basic definition is amplified by the provisions in Schedule 1 and there is provision for the minister to make regulations.
All of the factors above need to be considered in determining whether a person is disabled.
4. Adjustments for disabled persons
S. 20 sets out three requirements to make reasonable adjustments:
Where a provision, criterion or practice provided by a body or person puts a disabled person at a substantial disadvantage in relation to the provision of a service, or the exercise of a function in comparison with persons who are not disabled, to take such steps as it is reasonable to have to take to avoid the disadvantage.
Where a physical feature puts a disabled person at a substantial disadvantage in relation to the provision of a service, or the exercise of a function in comparison with persons who are not disabled, to take such steps as it is reasonable to have to take to avoid the disadvantage.
Where a disabled person would, but for the provision of an auxiliary aid, be put at a substantial disadvantage in the provision of a service, or the exercise of a function in comparison with persons who are not disabled, to take such steps as it is reasonable to have to take to provide the auxiliary aid.
From the point of view of valuation it is the first and second requirements which are important. Employers, retailers, providers of entertainment facilities etc need to ensure they take such steps as it is reasonable to have to take to ensure disabled persons are not put at a substantial disadvantage compared to others.
The requirement is not absolute. It has both to put the disabled person not simply at a disadvantage but at a ‘substantial disadvantage’ and is only to take steps that are ‘reasonable.’ Regulations can prescribe what steps are ‘reasonable.’
Section 212 (1) defines ‘substantial’ as ‘more than minor or trivial.’
Schedule 2 amplifies and explains avoiding the disadvantage also includes adopting a reasonable alternative method of providing the service or exercising the function.
For valuation it is the suitability of premises for use by disabled persons and the ease with which they can be adapted which will be relevant.
In relation to the second requirement s.20(9) provides that taking steps to avoid a disadvantage includes:
- removing the physical feature in question,
- altering it, or
- providing a reasonable means of avoiding it.
A physical feature is a reference to—
- a feature arising from the design or construction of a building,
- a feature of an approach to, exit from or access to a building,
- a fixture or fitting, or furniture, furnishings, materials, equipment or other chattels, in or on premises, or
- any other physical element or quality.
The Equalities Act 2010, unlike much other legislation, is retrospective and does not just affect service providers operating from new buildings/facilities but also applies to existing premises.
The Act does not seek merely to ensure some access is available to disabled people: but, so far as is reasonably practicable, to approximate the access for disabled people to that enjoyed by the rest of the public. The duty to make reasonable adjustments is to provide access to a service as close as it is reasonably possible to get to the standard normally offered to the public at large.
Paragraph 7.13 of the ‘Equality Act 2010 Code of Practice – Services, public functions and associations’ states that the disadvantage created by the lack of a reasonable adjustment is measured by comparison with what the position would be if the disabled person in question did not have a disability.
5. An anticipatory duty
In relation to services and public functions, the duty to make reasonable adjustments is owed to disabled people generally rather than a duty in relation to each individual disabled person who wants to use the service. It is an anticipatory duty owed to people who might use the service and it is in anticipation that the duty to make reasonable adjustments arises
The Code advises that service providers should not wait until a disabled person wants to use a service before they give consideration to their duty to make reasonable adjustments. They should anticipate the requirements of disabled people and the adjustments that may have to be made for them.
The duty is to disabled people at large and so it applies regardless of whether the service provider knows that a particular person is disabled or whether it currently has disabled customers, members etc.
When disabled customers request services, the service provider should already have taken all reasonable steps to ensure that they can be served. Service providers are not expected to anticipate the needs of every individual who may use their service, but what they are required to think about and take reasonable steps to overcome barriers that may impede people with different kinds of disability. For example, people with dementia, mental health conditions or mobility impairments may face different types of barriers.
6. Reasonable Steps
The Act does not specify that any particular factors should be taken into account in deciding what steps are reasonable. In paragraph 7.29 the Code suggests what is a reasonable step depends on all the circumstances of the case. It will vary according to:
- the type of service being provided;
- the nature of the service provider and its size and resources; and
- the effect of the disability on the individual disabled person.
And the code provides some non exhaustive considerations:
- whether taking any particular steps would be effective in overcoming the substantial disadvantage that disabled people face in accessing the services in question;
- the extent to which it is practicable for the service provider to take the steps;
- the financial and other costs of making the adjustment;
- the extent of any disruption which taking the steps would cause;
- the extent of the service provider’s financial and other resources;
- the amount of any resources already spent on making adjustments; and
- the availability of financial or other assistance.
The Code advises it is more likely to be reasonable for a service provider with substantial financial resources to have to make an adjustment with a significant cost than for a service provider with fewer resources.
The resources available to the service provider as a whole are likely to be taken into account as well as other demands on those resources. Where the resources of the service provider are spread across more than one business unit or profit centre, the demands on them all are likely to be taken into account in assessing reasonableness.
The reasonableness of an adjustment is an objective one for the courts to determine.
7. Design Standards
The Act does not provide a design standard for a service provider to follow in order to produce a building which offers a non discriminatory service. However, since 1984,new or substantially altered buildings have had to comply with Part M of what are now the Building Regulations 2010. This states that ‘reasonable provision shall be made for people to gain access to and use the building and its facilities’, and this includes people who are disabled.
The Equality Act 2010 provides that if a physical feature in the service provider’s building meets with the existing building regulations, then the provider does not have to make a reasonable adjustment to it until 10 years after it was installed or built. This applies if, for example, if the premises already have a ramp or a hearing loop fitted in a meeting room.
8. Statutory Regulations
The Act does not override other legislation and there is still a need to comply with planning, building regulations approval and listed building consent. English Heritage, for example, has produced a guide to assist owners of listed buildings.
Special provisions apply where a lease does not allow the tenant to make alterations without landlord’s consent. The landlord may not withhold consent unreasonably, but may attach reasonable conditions. There are strict time limits within which landlords have to respond to applications from tenants to carry out alterations.
9. Reaction to the Disability Discrimination Act 1995
The initial response in the professional press to the Disability Discrimination Act 1995 was largely negative, insofar as an immediate and possibly damaging effect on value was forecast, with severe implications for those areas with older stock and period offices becoming unlettable without costly alterations.
There were some reports of the Act having an effect at rent review, but the initial effect appeared to be limited.
In the time since the passing of the original Disability Discrimination Act 1995 the market has had the opportunity to adjust to the requirements. Various alterations have been made to some buildings – the banks were particularly active in providing ramps and even lifts to assist wheelchair users gain access. Rents will have also adjusted to the extent needed to reflect the fact some buildings cannot reasonably be adjusted to meet the needs of some disabled persons.
10. The Act in practice
The aim of the Act is to make goods, services and facilities more accessible to all disabled people by making it unlawful to discriminate in their provision. It is important to recognise that mobility impairment is not the sole disability, only a small proportion of people who have a disability use a wheelchair of have difficulty walking or climbing steps; disability covers a wide range of physical disabilities but it is mobility that comes to mind with regard to property because of physical barriers.
The Act does not focus on the building, it is the way the service is offered that may be discriminatory. The building cannot be certified as ‘complying’ with the Act.
The Code promotes removal or alteration of physical barriers as being good practice and the provision of a reasonable alternative method of offering the service as a last resort. However, if an alternative means of satisfying the Act can be provided other than by a physical adjustment and the result is that disabled people can gain access to the service without unreasonable difficulty, then the service provider’s obligations under the Act would be satisfied. It is important to remember that while the duty is prompted by physical features of premises, discharge of that duty may not necessarily mean adjustment to those premises.
Alternative venues for meetings, assistance with shopping and adjustments to working practices are perhaps reasonable alternatives to consider. Examples:
A small retail unit trading from more than one floor. Is it reasonable for the service provider to install a lift or is it more realistic to offer the disabled person a seat on the accessible ground floor and training staff to bring the goods to him or her. This would not be a perfect answer, but it may be reasonable in all the circumstances.
A hairdresser trading from unlifted first floor premises. The hairdresser could offer to cut the customer’s hair in his or her own home.
It is not the intention of the Act to require a service provider to alter the fundamental nature of its service, profession or business in order to comply. A useful example is a nightclub with low-level lighting. The proprietor would not be required to adjust the lighting to accommodate customers who are partially sighted if this would change the atmosphere or ambience of the club or turn down the volume of its music because hearing aid users would find the volume uncomfortable.
11. Valuation effects for rating lists
The fact that a new service provider occupies a building and finds some of its service provision does not comply with the Act is not a “matter” as set out in Schedule 6(7) of LGFA 1988. It is not a material change of circumstances because the change of occupier is not a ‘matter’ and the physical state or physical enjoyment of the property has not changed.
For the 2010 lists the relevant legislation in force at the antecedent valuation date was the Disability Discrimination Act 1995 as amended. The Equality Act 2010 applies for the 2017 lists.
Where, in order to comply with the Act, works have been carried out to overcome physical barriers (an example being where a ramp has been erected in retail space), the works are a material change in themselves. Whether they have a value effect then needs to be considered.
The general approach to the validity of proposals is dealt with in RM 2:2; whilst RM 2:5 deals more specifically with proposals made on the grounds of material change of circumstances.
12. Valuation Effects of non compliance
Where it is argued that the hereditament does not “comply” with the Act at the material day then:
- Identify exactly what are the “physical barriers”
- Consider what works are suggested by the service provider/occupier in order that he/she may comply with the Act.
- Are these works ‘reasonable steps’ weighting cost against practicality and the resources of the service provider.
- Is it possible in the circumstances of the particular case that services could be provided in a satisfactory and non-discriminatory way by another acceptable means.
- Has the occupier had appropriate professional advice (e.g. an access audit) to assess the accessibility of the premises against the relevant criteria? Whilst receipt of such an audit does not itself determine whether physical alterations are necessary, there may be cases where the occupier thinks that works are required when expert advice would suggest they are not
- Whilst the actual occupier may have to address certain physical barriers on the premises for his/her own particular business, would the hypothetical tenant be in the same position? It may be that the works are peculiar to a particular service provider’s business and that the hypothetical tenant would not necessarily be so affected. In order to consider the most likely business of the hypothetical tenant, it would be necessary to look at surrounding users and draw a conclusion from the businesses operating in the locality. In short, the needs of the hypothetical tenant may not be the same as those of the actual occupier.
If the works are de minimis, then it is suggested that there would be no adjustment in value.
Consider any rental evidence, do these rents arise from other similar properties which are not “compliant”, in which case no allowance should be conceded as non-compliance is already reflected.
Rental evidence may be presented to support an allowance and in this respect any non-compliance effect will have to be differentiated from allowances normally conceded for, say, poor layout/ steps which may have previously been granted.
There may already be an allowance built in to the assessment, which fully reflects the disadvantages from which the hereditament suffers. Consideration needs to be given as to whether it is likely that the prospect of a claim under the Act for non compliance would make the disadvantages any more value significant.
The overall perception is that, with the exception of limited anecdotal evidence, rents have not been adversely affected by the Act and that it is not really a value significant factor in the market at AVD.
If it is considered that, under all the circumstances, the hypothetical tenant would need to alter, amend or adapt the premises and evidence points to this being reflected in the rateable value of the hereditament, a suggested means of measuring an adjustment in RV is by amortising the carefully considered costs involved over an acceptable term, reflecting the life expectancy of the works, providing the alteration can be envisaged within rebus sic stantibus. If they cannot be envisaged rebus sic stantibus then an assessment of the level of rent for the premises non-compliant will have to be made. This may entail consideration of the bids of a reduced class of tenant who would not need to be compliant. However the Act does not make such premises unusable, rather it requires reasonable steps to be taken and normally steps that are reasonable will be within rebus.
13. Where it is argued that the works carried out have had a detrimental effect on the value of the hereditament
Proposals may be received on the basis works carried out to a building have reduced its usability. For example a ramp may have been created in or at the entrance to a shop to facilitate easy access for wheelchairs and has reduced the useable level shop floor space.
Consider what works have been carried out, whether expert advice has been provided, whether the hypothetical tenant would need to carry out the works, was there another acceptable means of meeting the duties imposed by the act?
Is there a rent and if so does it reflect the perceived implications of the Act, or does the rent or other comparable rental evidence arise from other similar properties which are not compliant. It is considered that it would be surprising if works carried out to make a building compliant reduced its rental value. Being compliant will often be a desirable feature and reasonably an improvement to a property increases its value or at least will not reduce it. By being compliant, the premises can be seen as “better” and therefore would have an increased, rather than reduced, rental value.
An allowance may have been built in to the existing valuation to reflect a “physical barrier” e.g. steps. Replacement with a ramp may justify removal / tempering of that allowance.
In order for the service provider to comply with the Act, it may be necessary to adapt part of the available floor space, for example by the provision of a ramp to enable wheelchair access. This may use what is effectively already access/circulation space or may use retail display or useable space. If it is in front of the entrance door or on an access route through the shop then it is not unreasonable to argue that no retail space is effectively lost. Where useable or retail space is lost there is clearly less useable area than before, however the property is now compliant. Comparison needs to be made with nearby premises. It may be that similar works will be needed to them in order to make them compliant and therefore it cannot really be argued the subject property, now compliant, is inferior. On the other hand it may be that the other properties were already compliant and these works were necessary to bring the subject property to the same standard. In this case loss of useable area under the requirements will mean the property has a relatively lower value. As mentioned above it is important to have regard to the basis of the rental evidence underpinning the tone. Is this rental evidence in respect of compliant or non compliant properties?
14. Measuring Practice
The RICS Code of Measuring Practice 6th Edition defines net internal area and gross internal area. For definitive guidance as to measuring practice, reference should be made to it and the Referencing Manual.
It is considered that certain “physical barriers”, such as steps/ramps, should be included in NIA/GIA. Para 3.6 under NIA includes ‘Ramps, sloping areas and steps within usable areas.’ Lavatory facilities in excess of normal staff requirements should also be included. This would include disabled lavatories added by the service provider as a result of his obligations to the public under the Act.